Gas demand and prices dip, but market volatile

The good news for Yuma-area motorists is record-setting gas prices have fallen a bit, partly due to a shrinking demand, according to AAA Arizona.

For the four-week period ending July 18, Americans used 2.4 percent less gas compared to a year ago, said a U.S. Energy Department report. Slackening demand is influenced by several factors, including $4-per-gallon prices at the pump and an overall slowing economy, noted Michelle Donati, AAA spokeswoman.

"It's fair to say people cut back on gas to pay for other consumer goods," Donati said.

Fewer travelers hit the road so far this summer but it is not a significant drop, Donati said. This Independence Day, AAA recorded 10.5 million travelers in the western region of the U.S. That is .08 percent less than a year ago. And prices seem to mirror that drop, receding more than $20 a barrel when crude oil hit its all-time high of $147 a barrel on July 11.

Barring unforeseen circumstances such as a major supply interruption, prices could fall a bit more but are likely to go back up as Labor Day approaches, spurred by an uptick in travel, noted Donati.

She added that Hurricane Dolly, which made landfall in Texas on Wednesday, has had almost no effect on oil production. But the switch to summer grades of gas, which is a cleaner-burning fuel and costs more to produce, does tend to push prices up.

"Emerging markets in China and India create a growing demand, so that will influence prices," Donati said.

"Because oil is traded in dollars and the dollar continues to gain strength (against competing currencies), it puts more downward pressure on prices. So it appears oil prices have reached a tipping point but the market remains volatile."

Dave Sellers, owner of Sellers Petroleum, a fuel distributor, noted that when President Bush lifted the executive ban on offshore oil drilling on July 14, the price of crude oil dropped $12 a barrel soon after. That ban had been in place since 1990. But lifting the ban alone is not enough.

"Congress must do its part and sign Bush's bill," Sellers said.

But congressional lawmakers from coastal states, mostly Democrats but some Republicans, too, have opposed drilling in these waters for 27 years.

The intent was to protect beaches from oil spills that may spoil tourism. Yet technology has improved so much recently that the "risk value of oil spills goes way down," Sellers said.

"There's lots of offshore drilling now," he said. "It's up to Congress to act. It's been told by its constituency they want an increase of offshore drilling."

The Energy Department's report doesn't surprise Sellers as he has seen his own business decline significantly from last summer. Yet he stressed if Congress supports the president's desire to expand offshore drilling, prices will also drop substantially.

Meanwhile, motorists can do a number of things to economize, Donati suggested. The best way to save is to carpool. Carpooling one day a week can reduce consumption by 20 percent.

Keeping tires properly inflated can increase mileage by 2 percent, as can getting regular tune-ups and oil changes.

Altering driving habits also helps. Driving 65 mph instead of 75 will increase fuel economy by 10 percent. Keeping windows closed while driving at highway speeds also increases mileage by 10 percent because it reduces air drag on vehicles. Avoiding rush-hour traffic and traveling with less weight will improve milage too.

To find the cheapest gas in the Yuma area, motorists can check our gas price Web page at http://www.yumasun.com/sections/gas-prices/.

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GAS PRICES
Avg. price in Yuma - $3.93/gallon (regular)
Avg. price last week - $4.02
Avg. price last month - $4.08
Avg. price last summer - $2.81

CHEAPEST GAS
Yuma:
Liquid Fuels, 351 E. 16th St. - $3.85
Barney's, 2381 Avenue B - $3.85

Arizona:
Tucson - $3.80

U.S.:
Oklahoma - $3.79

MOST EXPENSIVE
Arizona:
Flagstaff - $4.21

U.S.:
Alaska - $4.69

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William Roller can be reached at
wroller@yumasun.com or 539-6858.